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SandRidge Energy to sell Permian assets for $2.6 billion

SandRidge Energy Inc. is selling most of its holdings in the Permian Basin for $2.6 billion.
BY JAY F. MARKS Modified: December 19, 2012 at 9:15 pm •  Published: December 20, 2012

“I think this makes a lot of sense,” said Dingmann, an analyst with SunTrust Robinson Humphrey.

He said some observers may question why SandRidge is selling its Permian assets so soon after acquiring them, but the company did not know about the potential of the Mississippian play, one Ward obviously likes.

“He's proven that the returns are not just good, but they're better than his Permian returns,” Dingmann said.

Morningstar Inc. analyst Mark Hanson said SandRidge's Mississippian assets seem to have more growth potential than its Permian holdings, making the play more likely to grab headlines for the company.

He said the Permian acreage is set to draw more money than he had estimated for SandRidge.

“It gives them some pretty badly needed cash,” Hanson said.

Ward has compared the potential of the emerging play to the productive Bakken Shale in North Dakota and Montana.

He said SandRidge believe the Mississippian “generates some of the highest rates of return for horizontal drilling in the U.S. today.”

“With 1.85 million net acres and 11,000 possible future drilling locations, the company is the industry leader in the region,” Ward said. “We also have a unique advantage because of extensive investments in critical infrastructure that make our operating costs there among the lowest in the industry.

He said the sale, which does not include assets tied to the SandRidge Permian Trust, will help the company fund its capital expenditures through 2014.

The Permian properties being sold were producing about 24,500 barrels of oil equivalent a day at the end of the day, SandRidge said.

The deal was announced after the market closed Wednesday, with SandRidge's stock up 2 cents to $6.50. It rose to $6.95 in after-hours trading.

Also ...

Second lawsuit filed in a month

A Florida man filed a securities lawsuit Wednesday against SandRidge Energy Inc.'s board of directors, accusing the Oklahoma City oil company's leaders of engaging in reckless business practices.

SandRidge shareholder Arthur I. Levine accuses the directors of approving transactions that benefitted them, not the company.

Levine's 30-page lawsuit echoes many of the complaints leveled by investment firm TPG-Axon Capital, one of SandRidge's largest shareholders.

It is the second such lawsuit involving SandRidge filed this month in federal court in Oklahoma City.


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